Idox has warned on the full year following a slower than expected first half, which was primarily caused by delays in new engineering information management (EIM) licence sales.
Idox said EBITDA profits for the year ending 31 October will be ‘no less than £18m’. In FY12 EBITDA profits were £16.7m, up 44% yoy (see here), so this represents a sharp slowdown in profit growth. CE Richard Kellett-Clarke acknowledged that the first half had been 'disappointing'. Investors thought so too, and trimmed 3% off Idox’s shares.
The EIM business has been the key focal point for Idox’s recent M&A via McLaren Software, and more recently FMx and CTSpace (see here and work back). While this has clearly boosted the scale of the EIM business, and therefore the sales pipeline in H113, closed order values were lower than last year. The information solutions business also delivered slower than expected growth, due to reductions in Dutch grant rates and UK Government spending. The one bright spot is the UK public sector software business (largely focused on election, property, land and environment), which has apparently sold 50 new systems. Idox is also taking this in to new markets. For instance it won an election framework agreement with the Norwegian Ministry of Local Government.
As an interesting aside, the EIM business launched in May what it calls a ‘virtual Business Process Outsourcing’ offering for document control, via a new £400k 12-month deal. Idox hosts its McLaren Enterprise application remotely and supplements this with document controllers, which it ‘recruits, trains and employs to supplement the customers' own document control team’ with SLAs. We think this sounds more like SaaS end user support, rather than virtual BPO or Business Process-as-a-Service (BPaaS), where Idox would be responsible for managing client outcomes.